Pensions and Divorce
Pensions are often the second-largest asset in a marriage after the family home, yet they're frequently overlooked or undervalued in divorce settlements. This module explains how pensions work in divorce.
Why Pensions Matter
The gender pension gap means women typically have significantly smaller pension pots than men. Understanding pension sharing is crucial for your long-term financial security.
The Three Options
There are three main ways pensions can be dealt with in divorce:
1. Pension Sharing Order The pension is split, and you receive a portion directly into your own pension pot.
2. Pension Offsetting You receive other assets (like more equity in the house) in exchange for your partner keeping their pension.
3. Pension Attachment Order You receive a portion of your ex-partner's pension when they retire (less common now).
Getting Pension Values
Request a Cash Equivalent Transfer Value (CETV) for all pensions. This is free once a year and shows the current value.
Tip: For defined benefit pensions (final salary schemes), the CETV may not reflect the true value. Consider getting an actuarial report.
Key Considerations
- State pension entitlement can also be affected by divorce
- You can share pensions even if one partner never worked
- The split doesn't have to be 50/50 - it depends on the overall settlement
Seek Professional Advice
Pension sharing is complex. Work with a family law solicitor and consider consulting a financial adviser who specialises in divorce.